The US government has shown no signs of progress in reaching an agreement that will restart Federal operations, adding to worries that the two sides will remain at odds through the October 17 deadline to raise the country’s borrowing limit.

House Speaker John Boehner has said he will work to avoid defaulting, however he also insisted that budget cuts would be a condition for raising the debt ceiling.

Obama and the Democratic Senate have been adamant about refusing terms to raise the country’s borrowing limit. The stalemate has sent the dollar tumbling and had a negative effect on stock markets as investors sell shares as a precaution.

Angela Merkel continued her talks with the Social Democrats over the weekend as she attempted to form a grand coalition. Although the party has been hesitant to partner with Merkel, its chairman told German newspapers that they would give up their push for tax increases if Merkel is able to find another revenue source. The Green party is also emerging as a possible coalition partner since a new, more centrist leader is expected to take over on Tuesday.

The BBC reported that Conservative leader Adam Afriyie has been speaking out about moving forward a UK referendum on its EU membership. Prime Minister David Cameron promised to hold a vote on membership in 2017 if he wins the general election, however Afriyie has said he will push Cameron for an October 2014 vote.

The Canadian dollar felt a lift from news that the Malaysian energy company Petronas is planning to spend $36 billion on a new liquefied natural gas plant and pipeline in Canada.

The World Bank revised its economic growth forecast lower for China and East Asia on Monday. The bank cited China’s shift from relying on exports to focusing on domestic demand as a major cause of the reduced forecast. The report showed the region is expected to grow 7.1 percent this year, down from the 7.8 previously forecast. The bank noted that the region will continue to spur the global economy as its growth still significantly outpaces its Western peers.

Asian markets were lower on Monday. The Japanese NIKKEI lost 0.79 percent and the South Korean KOSPI lost 0.12 percent. The Australian ASX 200 lost 0.90 percent and Indonesia’s JSX composite was down 0.14 percent.

European Markets

Europe’s markets were quiet on Monday morning with most indices flat with little change. The UK’s FTSE was up 0.08 percent and the eurozone’s STOXX 600 was unchanged. Italy’s MIB recovered from last week’s political drama and gained 1.59 percent.

Energy futures slid lower on Monday; Brent futures lost 0.32 percent and WTI futures were down 0.47 percent. Gold increased by 0.30 percent as investors flocked to the commodity as a safe haven and silver gained 0.15 percent. Industrial metals were up across the board with tin posting the largest gains, up 5.49 percent.

The dollar began the week under pressure amid government shutdown worries. The euro was steady about $1.35 and the pound gained 0.13 percent against the dollar. The yen rose 0.35 percent against the greenback.

Tower Group, Inc. (NASDAQ: TWGP) is expected to report a second quarter loss of $0.57 on revenue of $421.10 million, compared to last year’s loss of $0.34 on revenue of $417.61 million.

Economics

Monday’s economic calendar will be a quiet one. Expected economic releases include US consumer credit, eurozone investor confidence, Australian business confidence and British house price balance data.